Can investor business funding decisions help with building a more sustainable future?
It's blindingly obvious that we all need to take more care of the environment on our planet. But can investor business funding decisions do anything to help with building a more sustainable future?
I take a look at three examples where investment funding is flowing to UK companies. I wanted to look at businesses that are directly contributing to a more sustainable future, not in the software app development world, but in the world of building physical things.
Affresol Ltd – synthetic concrete made from recycled materials
Concrete is used everywhere. The raw material extraction, mixing process and the concrete itself all take their toll on our environment. Affresol Ltd has eliminated much of that by creating a synthetic concrete made of 70% waste that has been diverted from landfill. They also make products and structural buildings from a high percentage of recycled materials. Their credentials have been recognised as they have won the prestigious “Sustainable Product of the Year” award from the Chartered Institute of Waste Management. (Source: Affresol Ltd)
Affresol Ltd is around ten years old. They have been through five funding rounds the most recent being in 2015. Their trademarked product TPR® is very innovative and has required a lot of research and development to create a product with sustainability at its core. They have relied on investor business funding decisions to back them to get as far as they have, securing £1.31M in a mix of equity and loan finance across five fundraisings between January 2010 and September 2015.
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Advetec - unique technology for the rapid digestion of organic waste
Advetec are manufacturers of unique technology that digests organic waste rapidly. One of the built-in benefits is that their technology provides opportunities for residual waste to be used for energy production. They have created a compact sustainable waste processing unit to treat, Sewage, Garbage and Medical waste in a sustainable unit for ships, housing developments and disaster control situations. They are pioneers in their field at the forefront of research and development working with notable partners (Source: Advetec).
Advetec were registered in 2007 but only started to take on equity investor business funding from the end of 2015. Over the period from December 2015 to November 2017 they have received £1.42M across four equity funding rounds. Advetec was recently in the news because it is “expanding its operations with a £600,000 investment in pilot plants and laboratories to test and trial pre- and post-treatment liquid and solid organic waste streams.” (Source: CIWM Journal Online)
Riversimple – a car with virtually zero emissions and an extremely efficient fuel system!
Riversimple is building a two seater ‘network electric’ car, powered by a hydrogen fuel cell. “The more environmental damage we eliminate, the more successful we will be as a business.” The company say that in developing the car its “primary concerns are: Carbon emissions, Total energy consumption”. The technology they are pioneering has virtually no emissions and is extremely efficient in fuel use. (Source: Riversimple). The design has clearly involved very significant levels of research and development to achieve sustainability outcomes.
The company was registered in 2015 and is based in mid Wales. In 2016 Riversimple was supported by £2M of grant funding from the Welsh Government and £2M from the EU. In the same year they also received a £105K Manufacturing & Materials grant from Innovate UK. A year ago in Apirl 2017 Riversimple was successful in closing a round of crowdfunding equity investment of £1.14M (Seedrs Riversimple) to match its European grant funding. In total they have received £4.16M in grants and £1.4M in equity investor business funding.
All three businesses, like most businesses are aiming to make a healthy profit. If they weren’t investment would be hard to come by. But it’s clear that this type of business is a higher risk proposition for investors. A lot of research and development is needed to bring the products to markets. So investors will need to wait longer for the levels of success enjoyed by fast growth tech companies like Deliveroo or Instagram. I believe that investor decisions to fund this type of company are critical to helping bring forward new ways of doing things, which can help reverse the environmentally damaging road we are all on.
I used Beauhurst (a searchable database of the UK's top startups and scaleups) to research these examples of where investment funding is flowing to companies involved in creating physical things that have sound sustainablty credentials. I was surprised how difficult it was to find just these three examples. Certainly if I was seeking to write about investor funding for fintech or proptech etc. there would be an abundance of examples to choose from.
Article by Linda Eziquiel, R&D tax credit specialist
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